NCLAT: Formal Condonation Plea Not Mandatory if Delay Justified on Record under IBC

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) has delivered a significant ruling concerning the procedural requirements for filing avoidance applications under the Insolvency and Bankruptcy Code, 2016 (IBC). In the matter of Ajay Kumar Bhuwalka Vs Bhuwalka Steel Industries Ltd., the Appellate Tribunal held that a separate, formal application for condonation of delay is not a strict prerequisite if the material on record sufficiently explains the reason for the delay.

The judgment reinforces the principle that procedural timelines under the IBC are often directory rather than mandatory, ensuring that the substantive objective of asset maximization is not defeated by technicalities.

Background of the Dispute

The appeal was filed by the nominal directors (Appellants) of the Corporate Debtor, challenging an order passed by the Adjudicating Authority. The core of the dispute arose from an Interlocutory Application filed by the Resolution Professional (RP). The RP sought contributions to the Corporate Debtor's assets and the imposition of penalties under Sections 43, 44, 66, and 69 of the IBC, read with Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.